Sanqi Mutual Entertainment achieves overall listing, striving to rebuild an entertainment empire overseas

It was announced on the evening of November 18 that the non-public offering of Shunrong Sanqi was unconditionally reviewed and approved by the China Securities Regulatory Commission. At the same time, Shunrong Sanqi Mutual Entertainment's parent company, said on the investor interactive platform on the 16th that MSCI's official website showed that Shunrong Sanqi had been included in the MSCI China A-Share Index, effective from November 30, 2015.

"If our overseas market can be truly established in 2017, its profits can be the same as or even higher than domestic ones. This is our goal." Li Yifei, founder and president of Sanqi Mutual Entertainment, once mentioned the overseas development blueprint to the media. It seems that this vision is expected to be realized ahead of schedule.

It was announced on the evening of November 18 that the non-public offering of Shunrong Sanqi was unconditionally reviewed and approved by the China Securities Regulatory Commission. Since the end of last year, Sanqi Mutual Entertainment has successfully entered the capital market through mergers and acquisitions, and has made great efforts to lay out an entertainment ecosystem that integrates platform-globalization-pan-entertainment. Now that the 2.8 billion yuan additional issuance has been approved to provide sufficient cash flow for international business development, Shunrong Sanqi has become famous as a constituent of the MSCI China A-Share Index. The overseas deployment of Sanqi Mutual Entertainment is expected to make breakthrough progress.

At the same time, Shunrong Sanqi Mutual Entertainment's parent company, said on the investor interactive platform on the 16th that MSCI's official website showed that Shunrong Sanqi had been included in the MSCI China A-Share Index, effective from November 30, 2015.

China game companies that were selected in MSCI's index at the same time as Alibaba, Baidu, etc. have attracted global attention.

First, let's popularize MSCI. For this familiar term in the financial circle, the game circle may think of is MSCI a female group name? People in the financial circle should ask, why does MSCI favor China game stocks?

This starts with the company Mingsheng. MSCI is the abbreviation of Mingsheng, a well-known index compiling company in the United States. It is a supplier of equity, fixed assets, hedge funds, and stock market indices. It compiles a variety of indexes. The MSCI index is the benchmark index most used by global portfolio managers.

The constituent stocks in the MSIC index are the most commonly used investment targets among global portfolio managers. Therefore, being included in the MSIC index will inevitably attract the intervention of some funds, which will not only enhance popularity.

On the afternoon of November 12, 2015, US Eastern Time, when Mingsheng announced its semi-annual review report, it disclosed that 14 stocks, including Baidu, Alibaba, Netease, etc., were included in MSCI's China Index and Emerging Markets Index for the first time;MSCI China A-Share Index added 228 new constituent stocks; 2 constituent stocks were excluded.

The reporter noticed that this change in the MSCI China Index reflects two major trends:

1. The weight of technology stocks has expanded significantly, and is expected to nearly double to 26% by May next year. This change will make the China Index the one with the highest weight of technology stocks among the MSCI Mingsheng series of indexes.

2. The sudden emergence of high-quality game companies has become a phenomenon, and their brilliance is as good as China's general game stocks. Game companies that are included in the MSCI China A-share Index like Shunrong Sanqi also include Youzu Network and Youjiu Games.

The benefits of being included in the MSCI Index are obvious. The inclusion of relevant stocks in the MSCI China A-Share Index will prompt funds that passively track these indices to buy immediately, and may also prompt funds that actively track indices to increase their positions in the long run.

SIC Morgan pointed out that in the long run, China is now the world's second largest economy. China's economy, especially emerging industries, is developing very rapidly. Including the MSCI Mingsheng Index is actually a recognition of China's economy and China's outstanding listed companies. It is the right time to invest in China.

China's Internet companies are ushering in the best times

. Looking back, why are A-share game companies favored by MSCI?

The MSCI China Index is based on three major standards: company size, industry representativeness, and securities circulation rate. It is characterized by fairness, objectivity, practicality, and reference. The index is compiled based on a bottom-up sampling method, striving to achieve broad and fair representation and having the flexibility to reflect the evolution of the A-share market.

As a listed company in the Internet sector of China Media, Shunrong Sanqi is a leader in the game industry and has certain industry representativeness.

Shunrong Sanqi semi-annual report disclosed that Sanqi Mutual Entertainment's share of the web game market in 2014 was 12.3%, and its market share increased to 13.4% in the first quarter of 2015, ranking second in the web game market in China, second only to Tencent.

At the same time, Sanqi Mutual Entertainment has seized the rapid development opportunity of mobile games and successfully launched exclusive releases such as "Tianjiang Xiongshi","Hot Blood Wonderland","Real Man","Young Warcraft","Light of Adventure","The Blade of the Blue Wings" and other high-quality games, and stocks S-class products such as "Overwhelming World". It has accumulated rich experience in the distribution and integrated promotion of various game products, and has officially entered the front-line distributors and distributors camp.

Judging from the recently released media third quarterly report, nearly 70% of the company's performance achieved high growth. Among them, Shunrong Sanqi's third quarterly report in 2015 showed that the company's net profit in the first three quarters was 346 million yuan, an increase of 10,521.34%, while its 60%-controlled subsidiary Sanqi Mutual Entertainment's net profit for the whole year this year is expected to be close to 800 million yuan., compared with last year's net profit of 340 million yuan, an increase of more than 200%. It is this rapid growth trend that makes it an interesting dark horse in the A-share market.

With the approval of Shunrong Sanqi's plan to issue an additional 2.8 billion yuan to acquire the remaining 40% stake in Sanqi Mutual Entertainment, Sanqi Mutual Entertainment will become a wholly-owned subsidiary of the listed company, which will contribute greatly to the improvement of the listed company's net profit.

The popularity of mobile games since 2013 has prompted many game companies to enter A-share listings through capitalization. In just two years, the number of listed game companies has doubled several times. Currently, there are more than 15 companies whose main business is games, and they have become a sector that cannot be underestimated. The first overseas Chinese game stocks to complete capitalization on Nasdaq are also seeking to return to the A-share family. This will promote the attention of the A-share game sector.

MSCI has become the best endorsement of globalization, and its overseas layout has accelerated

Sanqi Mutual Entertainment, which already occupies an important share in the domestic market. The next strategic direction is globalization. The company's plan to raise a fixed amount of 2.8 billion yuan has been approved, providing sufficient capital support for further building an entertainment ecosystem integrating platform-globalization-pan-entertainment.

According to the company's founder's goal, a Sanqi Mutual Entertainment will be recreated overseas in 2017. Being included in the MSCI Index provides the best endorsement for globalization.

According to Shunrong Sanqi's semi-annual report, Sanqi Mutual Entertainment has been working step by step in overseas markets and has been fruitful. In 2013, it successfully settled in Asian regions or countries such as Hong Kong, Macao, Taiwan, and South Korea; in 2014, it successfully entered the English, French, and Arabic game distribution and operation markets (including the United States, Britain, France, Turkey and other countries); in the future, it plans to explore Japanese, German, Portuguese, Spanish, Polish, Russian and other markets.

As of June 30, 2015, Sanqi Mutual Entertainment's 37GAMES international platform market covers more than 50 countries, becoming one of the most extensive web game platforms in the world.

In addition to expanding its own overseas business, Sanqi Mutual Entertainment also cooperates with overseas companies to explore overseas markets through investment and shareholding. Currently, Sanqi Mutual Entertainment holds a 59.12% stake in South Korean subsidiary Promise Entertainment, and indirectly holds a 5% stake in South Korean listed company EST SOFT through Promise Entertainment, and Japan's Braeve Co., Ltd., of which the Japanese subsidiary is mainly responsible for online games and mobile games operations in the Japanese market, while EST SOFT's anti-virus software has a market share of 94% in South Korea. It has a portal website and a search engine, and is also the famous end-game "Earth-shattering" development.

Sanqi Mutual Entertainment also plans to extend the global CP strategic alliance overseas. As early as August 2014, Sanqi Mutual Entertainment and Qifan Network held an N7 strategy conference. Sanqi Mutual Entertainment invested in Qifan Network and jointly established an Excellence Investment Incubation Fund to support the growth of small teams of web games and mobile games, and successively cooperated with Giant Network and other well-known domestic CPs have reached strategic cooperation and launched high-quality game products.

As an overseas version of this strategy, in August 2015, Sanqi Mutual Entertainment and Oriental Xinghui M & A Fund jointly acquired an 81.25% stake in SNK Playmore Corporation, a well-known Japanese game company, introducing well-known overseas IPs such as "King of Fighter" and "Soul Servant" into China for customization and global distribution.

The reporter learned that just recently, Sanqi Mutual Entertainment publicly announced the implementation of an overseas "Eagle Raising" program, which will establish an international investment department and spend US$100 million as a seed investment fund for global game studios within five years. This fund will be mainly used to support small Western studios, increase the overseas advantages of Sanqi Mutual Entertainment from the CP level, and reserve high-quality games.

The many high-quality IP resources that Sanqi Mutual Entertainment has accumulated so far will also be jointly developed by overseas high-quality CPs through this plan to achieve the ultimate goal of IP internationalization. Perhaps in the near future, many products of Sanqi Mutual Entertainment, such as games such as "Langya Bang","Tianjiang Xiongshi","Kuiba", etc., will become popular around the world.

Editor: vian